Trade With the Trend

If you have traded for any serious amount of time, you have probably heard the saying “the trend is your friend.” I start my Group Coaching class each and every session by reminding traders to consider the trend. To me it is an important reminder to look for opportunities when it comes to trends.

As traders, we are always searching for an edge and ways to put the odds on our side. Looking for opportunities and being patient fit these criteria. To me an uptrend is an underlying that is setting higher highs and higher lows. I consider these highs and lows to be pivot levels. I tell my class to be patient and check for bullish opportunities within the uptrend. I like to see pullbacks (buy setups) to support areas and bullish reversals. I look for a predominantly bullish candle to close above the previous candle’s high like below. This often works on any time frame.

On the flip side, an underlying that is setting lower lows and lower highs would be classified as a downtrend. Look for bearish opportunities within the downtrend. I like to watch for rallies (sell setups) into resistance areas and bearish reversals. I look for a predominantly bearish candle to close below the previous candle’s low like below. Once again, this often works on any time. While it is not a guarantee, to me the odds are on my side.

The bottom line is to trade with the trend, be patient and put the odds on your side as much as you can. If you look and wait for these buy and sell setups, you will only improve your odds of being successful and profitable.

John Kmiecik
Senior Options Instructor
Market Taker Mentoring, Inc.